The deal gives Accelero a network of 30,000 kilometers
(19,000 miles) of fiber-optic lines, reaching 50,000 business
customers across Canada. It also represents an about-face for
Sawiris, who said in November 2011 that Canada wasn’t a good
place to put investors’ money. He had struggled with his earlier
investment into Wind Mobile, which faced competition from other
discount wireless operators as well as legal challenges over
Canada’s foreign ownership restrictions.

Sawiris said in a statement that today’s transaction
“reflects Accelero’s long-term commitment to the Canadian
telecommunications market, and our belief in the opportunity
that exists to provide capital to enhance the competitive
landscape in Canada.”

Manitoba Telecom Chief Executive Officer Pierre Blouin is
selling the Toronto-based Allstream unit to focus on his
company’s consumer telecommunications business. Manitoba Telecom
plans to use the proceeds to fund its pension and repay debt. It
also will invest in new spectrum and improve the speed of its
existing wireless networks.

Shares Rise

Shares of Winnipeg-based Manitoba Telecom climbed 5.7
percent to C$33.93 in Toronto. The stock has risen 4.5 percent
this year, valuing the company at about C$2.3 billion.

In his earlier foray into Canada, Sawiris’s Orascom Telecom
Holding SAE backed Wind Mobile with a $700 million loan in 2008,
helping finance the company’s purchase of wireless spectrum.

Wind Mobile’s initial strategy of offering cheap prepaid
wireless service faced competition from other discount operators
such as Public Mobile, as well as the established brands.

Accelero has submitted a bid to buy Wind, a person with
direct knowledge of that process has said, asking not to be
named because the information is private.

Accelero, working with another partner, is bidding between
C$500 million to C$700 million, including the $440 million in
spectrum assets Wind bought in 2008, the person said.

Regulatory Approval

Bessada said he is confident that the Allstream deal will
be approved as it offers a valid benefit to Canadian businesses.

“We see no reason why the Canadian government will reject
this,” he said.

The Allstream deal boosts the chances that Accelero will
buy Wind, said Drew McReynolds, an analyst at RBC Capital
Markets. Sawiris started Accelero, which is based in Paris and
Cairo, after building a wireless empire that spans Europe, the
Middle East and North Africa.

“This transaction increases the probability that Accelero
will look to acquire Wind Mobile,” McReynolds said in a note,
citing the potential synergies and Sawiris’s “renewed
commitment to Canada.”

Manitoba Telecom, meanwhile, may eventually be an
acquisition target for a large phone company like BCE Inc.’s
Bell wireless business or Telus Corp., McReynolds said.

“Without Allstream, we believe MTS could become a takeout
target for either Bell or Telus over the longer term,” he said.

Blouin, speaking on a conference call with analysts,
declined to say whether today’s deal makes Manitoba Telecom a
more likely target. Manitoba Telecom plans to use C$130 million
from the sale to contribute to the company pension and will
repay C$70 million in debt.

“We believe this deal is positive for Allstream, MTS and
telecom overall,” Blouin said. “This supports the plans we
have for making MTS even stronger.”